A federal judge delivered a harsh setback yesterday to Attorney General Janet Reno's campaign finance investigation, throwing out much of the government's case against Democratic fund-raiser Maria Hsia after finding that it was built on a prosecution theory that "defies logic."

U.S. District Judge Paul L. Friedman dismissed five of six felony charges against Hsia, one of the few key figures indicted so far in the 22-month Justice Department probe of alleged fund-raising abuses by the 1996 Clinton-Gore reelection effort. Hsia first came to public attention for her role in organizing a controversial 1996 campaign event held at a California Buddhist temple that was attended by Vice President Gore.

Friedman ruled that Hsia must still stand trial Oct. 19 on a conspiracy charge that was at the core of the indictment against her. She stands accused of orchestrating a scheme from 1993 to 1996 in which the Hsi Lai Temple of Hacienda Heights, Calif., repeatedly made illegal contributions to Democatic campaigns and party organizations, including $65,000 generated by the event Gore attended. The temple, known formally as the International Buddhist Progress Society, was named as an unindicted co-conspirator. No others were charged in the case.

While preserving the conspiracy charge, the judge tossed out five other counts alleging that Hsia caused campaign and party organizations to file false statements about those donations with the Federal Election Commission. The judge said the government failed to show a connection between Hsia and fund-raising reports filed in 1995 and 1996 by the Clinton-Gore '96 Committee and others. He said prosecutors relied upon an "Alice-in-Wonderland-like maze of logical leaps and tangled inferences."

"At every turn, one encounters another place where the government's theory defies logic and stretches almost beyond recognition the two criminal statutes on which it relies," Friedman wrote in his 60-page decision.

Hsia's attorney, Nancy Luque, said yesterday, "We're very happy with the judge's ruling. I would say the majority of the case against her is gone."

Though prosecutors were surprised by the sweep of the ruling so early in the case, a senior Justice Department official said that the remaining conspiracy charge would form an adequate basis for bringing a case against Hsia. Justice Department spokesman Bert Brandenburg said the ruling was under review to determine whether it should be appealed.

Friedman's ruling comes as Reno faces increasing pressure from Republicans in Congress to seek a broad-ranging independent counsel investigation of 1996 Clinton-Gore fund-raising. In defense of her own prosecutors, Reno has often pointed to the cases brought against Hsia and other major fund-raisers, including Yah Lin "Charlie" Trie and Pauline Kanchanalak, as signs they were making progress. All told, charges have been filed against 11 individuals.

During the past two weeks, the Justice Department has begun three separate preliminary investigations related to 1996 campaign activities by President Clinton, Gore and former deputy White House chief of staff Harold M. Ickes, any of which could lead to the appointment of an independent counsel. Hsia does not appear to play a role in those investigations.

Like Hsia, Trie and Kanchanalak are awaiting trials before Friedman. Hsia is scheduled to go on trial first, and the ruling in her case could have implications for the others. Trie has raised many of the same arguments cited by Hsia in his own bid to have some charges dismissed. Friedman has not yet ruled on Trie's motion.

In what remains of the indictment against her, Hsia, 47, a naturalized U.S. citizen born in Taiwan, is charged with conspiring with the temple to enlist unnamed nuns, monks and others to make roughly $100,000 in illegal campaign contributions. These so-called "straw donors" gave their own money to political organizations and then were reimbursed with temple funds, according to the indictment. The temple is prohibited by law from making such donations because it is a nonprofit religious organization. Hsia, who resides in the Los Angeles area, repeatedly has denied any wrongdoing.

Among the events cited in the conspiracy charge is Gore's April 29, 1996, appearance at the Hsi Lai Temple. Before and after the event Hsia allegedly solicited contributions to the Democratic National Committee from temple personnel and others. Among the donations were $65,000 that allegedly came from straw donors who were later reimbursed in full with checks from a temple bank account. Gore has insisted he had no direct knowledge of the fund-raising.

The conspiracy charge against Hsia carries a maximum penalty of five years in prison.